Accountant is charged in UBS accounts inquiry

Prosecution is the first in IRS crackdown on Swiss bank's secrecy

In the first blow against U.S. taxpayers suspected of hiding billions in secret Swiss bank accounts, federal authorities arrested an accountant for a Coral Springs yacht maker Thursday morning in the luxury waterfront home he is accused of building with money concealed from the Internal Revenue Service.

Steven Rubinstein, 55, is the first American account holder to be criminally charged in the federal government's ongoing investigation of Swiss banking giant UBS.

His banking records were among the documents turned over by UBS in February under a $780 million settlement agreement with the U.S. government, according to a criminal complaint.

Prosecutors said Rubinstein stashed at least $6 million in UBS accounts between 2001 and 2008, withdrawing roughly $3 million to build a 10,500-square-foot residence at the Royal Palm Yacht and Country Club in Boca Raton.

Alex Acosta, U.S. attorney for South Florida, said the prosecution of Rubinstein would only be the first to result from the investigation of the major Swiss bank.

"It is our duty to those who pay their legal share of taxes to ensure that others do not use offshore schemes to evade payment," Acosta said.

Rubinstein, who works for an international yacht manufacturer, is charged with failing to disclose his UBS accounts to the IRS and not reporting interest earned on those accounts on his tax returns.

Dressed in jeans and a blue polo shirt and with his hands and ankles shackled, he made his initial court appearance before a Fort Lauderdale federal magistrate Thursday. Rubinstein said little during the brief hearing. His attorney, Robert Panoff, who was out of town, addressed the court by telephone.

U.S. Magistrate Barry Seltzer ordered Rubinstein held until a bond hearing next week. Prosecutor Jeffrey Neiman told Seltzer he considered Rubinstein, a dual U.S.-South African citizen, a possible flight risk.

Several lawyers monitoring fallout from the UBS investigation called it a certainty that more charges would be filed against the bank's wealthy American clients.

"It's the beginning of a major crack in the secrecy of Swiss banking," said Dennis Kainen, a South Florida defense attorney.

According to the criminal complaint lodged against him, Rubinstein opened accounts with UBS in 2001 in the name of a foreign shell corporation headquartered in the British Virgin Islands.

Prosecutors said Rubinstein created the corporation, Hybridge International Ltd., to hide his ownership of the UBS accounts and avoid paying taxes.

From 2001 until last year, he met with UBS bankers at Miami's Art Basel festival, which the bank helps sponsor, at South Florida restaurants and in his Boca Raton home, the complaint states.

Rubinstein deposited more than $2 million in Krugerrand gold coins into his UBS accounts and also purchased securities worth more than 4.5 million Swiss francs, the current equivalent of roughly $4 million, the complaint states. Rubinstein also directed the transfer of more than $3 million through a bank in Monaco to a corporate account in New York to pay for construction of his home in Boca Raton, federal prosecutors allege.

The U.S. government is currently pressing UBS to disclose the names of more than 50,000 Americans suspected of using its vaults to conceal billions of dollars in assets from tax collectors. The bank says disclosure would violate Swiss law.

Staff Researcher Barbara Hijek contributed to this report. Vanessa Blum can be reached at vblum@SunSentinel.com or 954-356-4605.

U.S. charge

Prosecutors said Steven Rubinstein, of Boca Raton, stashed away at least $6 million between 2001 and 2008.